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Raytheon's ESM Clears Field Test - Analyst Blog

As part of a new product improvement program,
Raytheon Company
(
RTN
) has successfully completed a field test of an advanced
Electronic Support Measure ("ESM") seeker that is installed on a
Block IV Tomahawk missile.

ESM comprises an advanced and modernized processor and antenna
that have the capability to locate and track moving as well as
fixed emitting targets. ESM has succeeded in the test only after
seven months of testing in anechoic chambers in high-density
environment.

Originally manufactured by
General Dynamics Corp.
(
GD
), Tomahawk is currently manufactured by Raytheon. The
combat-proven Tomahawk is the world's most capable cruise missile
and is ideally suited for critical long-range and
precision-strike missions. Raytheon continues to evaluate
Tomahawk's technical and operational capabilities with the U.S.
Navy.

Tomahawks can fly into heavily defended airspace and precisely
strike high-value targets with minimal collateral damage. The
Tomahawk Block IV missile includes a two-way satellite data-link
that enables a strike controller to redirect the missile
in-flight to preprogrammed alternate targets or more critical
targets. This newly added feature has enhanced the capability of
the Tomahawk Block IV.

Recently, the company has successfully test fired a Standard
Missile-3 (SM-3) Block IB for the Missile Defense Agency from the
U.S. Navy's guided-missile cruiser, USS Lake Erie. The SM-3 is
the newest incarnation of U.S. defense missile technology and
replaces the medium-range ballistic missile. The latest test was
the 26th successful intercept for the SM-3 program, the highest
to date.

Given the current defense budget uncertainty, threat of
sequestration and partial U.S. government shutdown, Raytheon's
continuous efforts to modernize its products would support its
top line.

The president's defense budget for FY14 calls for maintaining or
augmenting funding for most of the company's biggest programs,
which include the Standard Missile-3 (SM-3) missile interceptor,
the Advanced Medium-Range Air to Air Missile and the SM-2 and
SM-6 ship defense missiles. Other programs include AIM-9X
Sidewinder, Evolved SeaSparrow, Javelin anti-tank missile, Joint
Standoff Weapon, Rolling Airframe Missile, Small Diameter Bomb II
and Tactical Tomahawk.

On the back of the company's strong program execution and its
ability to match the security needs of its customers by offering
premium quality products, the company presently has a short-term
Zacks Rank #2 (Buy). Other well-placed stocks are
Lockheed Martin Corp.
(
LMT
) and
Northrop Grumman Corp.
(
NOC
), both with a short-term Zacks Rank #2 (Buy).

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